Business Case Analysis: Talent Management Strategy
In today’s hyper-competitive and complex global economy, organizations have started to realize the importance of selecting and recruiting the best talent. Along with the realization of the importance of recruiting, hiring, developing, and retaining a talented workforce, the need for managing talent as a critical resource has gained popularity among modern organizations. Broadly defined, the concept of talent management is the execution or implementation of integrated systems or strategies that are designed to increase employees’ productivity through the development of enhanced processes of attracting, recruiting, retaining, developing, and utilizing the right talent to meet both current and future organizational goals. Previously, organizations saw talent management as a responsibility best transferred to the personnel department. Today, however, talent management is seen as an organizational function. Talent management is largely influenced by external factors including but not limited to global expansion, the economy, and mergers and acquisitions. The critical success factors for talent management to be successful include its alignment with strategic goals, active participation of top management and human resource management. Over the years, some major themes have emerged, including but not limited to the role and responsibility of line leaders in talent development. Other themes include the involvement of top management, accountability, management, culture, and processes. Studies indicate that many organizations are moving from a reactive to proactive approach in a bid to harness their talent. Further, firms have different organizational capabilities brought about by the strategies employed to attract, motivate, retain, and develop talents and skills. In line with this argument, staffing plays an important role in terms of establishing and maintaining a competitive advantage for any organization. It is also important to note that the firm’s competence and resources can enhance its competitive advantage and create value for the consumer by reducing costs, providing unique products, or by combining the two.
Drivers and Importance of Talent Management
One of the drivers of talent management is the desire of the organization to get a competitive advantage. Talent management strategies are based on five primary areas including, attracting, selecting, hiring, developing, and retaining human resources. Top-tier organizations focus more on talent retaining and development. Sources of competitive advantage include convenience, speed, distribution, and first to market. The firm also needs to understand the importance of its staff with regard to their contribution to the overall business performance. Talent management as a function is driven by trends in the workforce. Factors such as increasing the virtual and global workforce, different age groups working together, autonomous and empowered workforce and improved life expectancy have the tendency to change the workplace (Lewis & Heckman 2006, p. 136). Owing to changes in demographics, the workforce is increasingly becoming diverse in relation to gender, age, cultural norms, ethnicities, and lifestyles. Organizations have already started to take the opportunities presented by the new trend.
Another driver for talent management has anticipated a shortage of skills over the coming years. While it is expected that the skills shortage will not affect all players in the given industry, it is predicted that the skills supply will slump, forcing organizations to start competing for talent. For instance, customer care, technology repair, and computer support industries are only some of the areas that are currently dealing with skills’ shortage. Furthermore, the expected decline in the supply of talent will depend on the size of the organization, the industry, or the sector. For instance, large firms are more likely to be concerned with the problem of talent loss following the retirement of baby boomers. Similarly, public organizations are more concerned with the issue of losing talent as compared with private companies (Lewis & Heckman, 2006 p. 137). Another driver of talent management is key business strategies. For example, with increased demand for global technical expertise, competency development should be linked to the company’s strategic goals. As one of the organizational strategy, corporate branding also drives talent management. Modern firms are increasingly associating their brand with corporate and employees’ behavior. This strategy is in line with the framework for global talent challenges and global talent management initiative as identified by Schuler and his colleagues (2011, p. 508) and as illustrated below.
The process of globalization has created a number of global talent challenges for modern business. According to Schuler and his colleagues (2011, p. 507), there are a number of factors that give rise to global challenges, including changing demographics, the process of globalization, increased demand for workers with a good level of competence and motivation, and supply of talent. To understand the process of globalization and how it affects talent management, the authors suggest looking for information by observing trends and realities in world trade and/wage differentials, competition, customers/markets, and individuals. The second factor behind increased challenges in global talent management is demographics. Population among developed economies has been shrinking while that of developing economies has been expanding, a fact that multinational companies should consider while making decisions regarding their location. The third factor is increasing the demand for talent. The labor market has seen a sharp increase in demand for competent and motivated workers. This is true for both new and existing jobs. Workers have been put under pressure to develop new levels of competencies. The emergence of the concept of knowledge workers with regard to managers, specialists, and technical researchers among other professions has had a big impact on the shape of the labor market (Schuler, Jackson & Tarique 2011, p. 509). This happens despite the fact that the supply of such workers has been increasing and the trend is expected to continue for some years. This may lead to increased wage competition and increased government interventions, as the latter seeks to create employment opportunities for the expanded labor force.
In the light with the abovementioned facts, an organization has to make sure that it has the right number of talents, at the right time, and at the right price. An organization may be required to increase or reduce the number of employees by new hiring and layoffs respectively, depending on its immediate needs. In addition, an organization may opt to start new operations or outsource existing operations. Still, an organization may be required to improve the efficiency of its training programs to ensure that workers are well equipped to handle their roles (Kehinde 2012, p. 178). Among other factors, human resource management strategy plays an important role in making a decision on the location or relocation of business activities.
First, the core of human resource management is the application of management principles and functions with regard to acquiring, maintaining, developing, and providing rewards to human resources. Secondly, HR management involves the integration of all decisions relating to different aspects of human capital. Thirdly, HR management involves making decisions that in turn affect the effectiveness of an organization and impact the betterment of services for customers. It is worth noting that HR management functions are not limited to business establishments and business functions, including health care, education, and recreation. It contains functions, activities, and programs designed to enhance the performance of employees as well as the organization (Schuler, Jackson & Tarique, 2011 p. 509). The scope of HR management is wide and involves all aspects of the working life of an employee, starting from recruitment to exit. Major activities of HR management include planning, job analysis, design, hiring, and executive remuneration, motivation, maintenance, and industrial relations. In this context, the scope of HR management includes all decisions, factors, principles, strategies, functions, operations, and practices involved in the process of managing people as human capital in an organization. Also, the scope of HR management includes all the dimensions relating to employee relationships and dynamics that come from such relationships (Schuler, Jackson & Tarique 2011, p. 600).
Another framework that can be used for explaining the concept of global talent management is strategic talent management. This model emphasizes the need to recognize and identify key positions that have the potential to influence the competitiveness of an organization. In this light, the model stresses the identification of the position first, before identifying the required talent. According to this model, the talent management strategy encompasses those activities and processes that are employed in identifying strategic positions, each of which has its own contribution to sustaining a competitive advantage. These positions also contribute to the development of a talent pool and high performance of individuals who play executive roles (Kehinde 2012, p. 178). Talent management under this model can also be viewed as the development of a human resource structure that facilitates the filling in of key positions with competent employees as well as their continued commitment to the overall goal of the organization.
The strategic talent management model is based on the premise that the differentiation of roles plays an important part in ensuring increased performance. The model also encourages organizations to focus on strategic jobs rather than non-strategic ones while designing their talent management strategy. It has been argued that the recognition of pivotal talent positions is the initial stage in talent management (Collins & Mellahi 2009, p. 305). Notably, studies have emphasized the need to identify ‘A performers’ in terms of talent development and retention. Similarly, some scholars advocate for the identification of ‘A position’ or key positions. These positions have a huge influence on the company’s competitive advantage. Additionally, some SHRM (strategic human resource management) researchers have adopted the bottom-up focus, which stipulates that employees are capable of contributing to the company’s strategic objective due to their uniqueness and value in the company (Collins & Mellahi 2009, p. 306). On the contrary, some scholars propose a top-down focus, which argues that employees have a strategic value once they contribute to the strategic objectives of the company. However, some strategic processes may not depend on human capital. As such, these scholars recognize that the job itself is the major locus of differentiation rather than individual employees.
The second element of the model focuses on the development of a talent pool composed of employees with high potential and high performance, who fill in the roles defined as the key positions and contribute to the competitive advantage of the organization. According to the model, organizations should be able to identify employees who are strategic performers and define ways of dealing with non-strategic performers. For a strategic position to contribute positively to the competitive advantage of the organization, it must be assigned to a high performing and high potential employee. This contradicts the belief that all roles in an organization should be filled with ‘A’ performers only (Collins & Mellahi 2009, p. 306). The term talent pool is used to refer to a pool of employees with high performance and potential to fill key talent positions. The idea here is to shift from traditional recruitment led by vacancy to recruitment ahead of the curve. Similar to succession planning, identifying a talent pool entails proactive identification of employees, who have the potential to fill certain positions should they become vacant. It is important to note that such employees are generally higher achievers and may become disillusioned when they think that they have been appointed to roles that have limited scope.
The final element of the model emphasizes the need to define and implement strategic human resource policies. Once an organization has identified the key positions and the individuals who have the potential to fill them, the next step involves using a human resource policy to support their performance.
Case Study: Dubai Electricity and Water Authority
The Dubai Electricity and Water Authority hereafter denoted as DEWA is the sole provider of electricity and water-related activities. DEWA was founded in 1992, immediately following the merger of Dubai Water Department and Dubai Electric Company. Currently, DEWA has a workforce of about 6000 employees, who are charged with the role of ensuring that the quality and quantity of provided services meet the highest standards relating to reliability and consistency. The company’s talent management strategy is aimed at developing and nurturing leaders across different organizational levels. Pursuing this agenda, the company has increased its efforts to assess employees’ competencies in a bid to identify and close the gap in development (“Classroom Material”). Moreover, the firm aims at achieving this through the evaluation of employee performance, productivity, and efficiency. Identifying the career path of its employees as well as developing clear succession plans also plays a central role in ensuring the successful implementation of the talent management strategy. Finally, the company hopes to implement the strategy by evaluating the effectiveness of training in order to find or identify areas of improvement and staff development.
DEWA has a well-established talent development strategy, which is overseen by the senior manager. The organization of talent development in the company is composed of five major components as demonstrated in the figure below.
The senior manager is charged with the role of developing and nurturing leaders across the organization. The manager is also responsible for mapping the career path of the organization’s employees and managing succession planning at various levels. Further, the senior manager has to measure return on investment (ROI), evaluate the performance of the employees, their efficiency, and productivity. Like the one on the top of the organization chart, the senior manager is also responsible for assessing staff competencies in a bid to identify the existing gaps and institute the necessary measures to ensure that the gaps are filled (Kehinde 2012, p. 179). The component of the career path is further subdivided into the career path plan and succession plan. Here, the career path of all employees is mapped and the implementation requirements managed. Succession planning also takes places under this component.
ROI falls under the component of development and entails closing employee competency gaps, both technical and behavioral, with the help of collaboration between the training and awareness department. Performance assessment component encompasses the employee performance management system, which is used to evaluate the performance of the staff and identify their productivity. The assessment center is responsible for conducting analysis on technical competency and identifying any gap in technical competency (Kehinde 2012, p. 182). Similarly, the assessment center conducts an analysis of behavioral competence and identifies any existing gaps. Employees are also assessed by an occupational personality questionnaire.
The career path plan, which in this case is the expected and developed plan for the organization’s employees, is based on a hierarchy of jobs. The main goal of the plan is to identify the right talent to fill the vacancy in upcoming posts, to support human resource policy, facilitate employees’ easier transition from one level of competency to the other, and seek approval and recommendation from the management. The objective of the career path plan is to enhance the current job performance of each employee in the organization, enable employees to take advantage of future job openings, promote leadership continuity, develop and maintain competency level, and encourage employees’ individual development, identify and analyze key job positions, and assess candidates’ personal and job requirements (“Classroom Material”).
There are various steps defined by the career path plan, which is designed to cover the next five years. This includes: select the target group to be included in the career path (grade 9 and above for Emirates and grade 12 and above for expatriates); ensure that each team has a set of competencies that are aligned with the objectives of the organization and performance appraisal; ensure that the target level of competency is met for each job title; and levels of competency are assigned according to the hierarchy of jobs (“Classroom Material”). On its part, the succession plan’s main objectives include identification and analysis of strategic positions and the associated pivotal roles that help to lessen organizational risk. In addition, the succession plan is also aimed at developing leadership within the organization, retaining and developing competency level, defining the competency level required for the next role, setting a development and improvement plan for the role successor, and recognizing and improving employees’ strengths.
Under DEWA talent management strategy, return on investment (ROI) is defined as a complete assessment program, where the results of training can be measured to obtain the maximum effectiveness of the training and its impact on employees’ performance. The main objectives of ROI are to develop methods for evaluating and measuring the effectiveness of the training program, link the training needs with work requirements, ensure that the trainees get the maximum benefit from the training program, and identify training programs that may need to be redesigned (Kehinde 2012, p. 181). Employee performance management is considered to be broader than performance appraisal and is defined as the process that aligns and links the objectives of an individual with those of the team and the organization in general. Employee performance management may encompass recruitment and selection, job design, career planning, training and development, performance appraisal, compensation, and benefits (“Classroom Material”). There are various objectives of employee performance management/assessment. Performance assessment is aimed at establishing a shared understanding of the set goals and the means of achieving them, creating a culture where reward and career growth are based on merit and provide a fair, equitable and transparent framework for performance evaluation. In addition, performance assessment is also aimed at fostering constructive and regular communication between the management and subordinate workers, promoting continuous learning and development and increasing employees’ satisfaction, commitment, and productivity by recognizing and rewarding their work. In this context, employee performance management includes planning, reviewing, assessment, and rewarding employees.
Dubai Electricity and Water Authority define assessment center in its talent management strategy as rigorous and systematic methods of identifying competency in relation to the processes of recruitment, selection, promotion, and career development within the organization. The main aim of the assessment center is to offer guidance to make sure that the organization embraces and develops the best talent for any particular role. The main objective of the assessment center is to relocate talent according to the results, to furnish the employee performance management system, the career path, and the succession plan with the results so that they can be integrated into the tests performed in other components. Competency is defined as measurable and observable knowledge, behaviors, abilities, and skills that add to the success of an individual (Kehinde 2012, p. 185). The objectives of behavioral and technical competencies include: offering a room for fair, equitable, and transparent competencies for the purpose of selecting and recruiting; supporting the identification and definition of the employees performance management system; understanding what is required from the employees and developing their careers; understanding the expectations of the organization and identifying personal training opportunities; promoting a culture of high performance; maintaining consistency in recruitment, performance management and training; and supporting both the career path and the succession plan.
Recommendations and Conclusion
Talent management involves implementation of integrated systems or strategies that are designed to increase employees’ productivity through the development of enhanced processes of attracting, recruiting, retaining, developing, and utilizing the right talent to meet both current and future organizational needs. Talent management, in this case, enables organizations to select, recruit, hire, develop, and retain the best talent. It helps in enhancing the competitive advantage of the company. In the above-discussed case study, Dubai Electricity and Water Authority have an elaborate structure for talent management that is led by the senior manager and involves components such as career path, development, performance assessment, and assessment center. Each of these components has well-elaborated aims and objectives and offer guidance on how different parameters are to be achieved or executed.
Whilst the review of DEWA talent management program reveals that the company understands the importance of talent management and is committed to developing talent, the organization is not using appropriate tools to address the challenges it is faced with. Such challenges include but are not limited to the integration of the Emiratization program, and hiring of qualified staff. The company also seems to treat management as a democracy, yet in reality, it does the opposite. For the organization to realize the best ROI, it must treat employees according to their performance. For example, the organization may choose to focus more on middle-level managers as the key drivers of performance. As the ones responsible for managing multiple functions, middle managers have a central role in ensuring increased performance. The enhancement of their development will, in turn, increase their success in pivotal positions. The organization may also appoint its middle-level managers to senior roles, which will not only motivate them but also increase their commitment to the overall goals of the organization. Further, the organization should separate the talent management scheme from the total HR style. This approach will allow the firm to ensure that there is a clear delineation between role expectation and training needs. In this context, the firm should not focus on recruiting and then offering on-site training but rather on recruiting the best talent and training him or her when it required. Doing this, the firm will minimize the rate of employee turnover as well as the need for making periodical recruitment exercises.